Corporate Ownership and Antitrust Violations

Mario Daniele Amore (Bocconi University)
Riccardo Marzano (La Sapienza University)

Abstract : We study how corporate ownership shapes the firms’ likelihood of being involved in antitrust indictments. Using data from Italy, we show that family-owned firms are less likely than firms with any other ownership structure to commit antitrust violations. To achieve identification, we exploit a law change that made it easier to transfer family control. Studying the mechanisms at play, we find that family firms are especially less likely to commit antitrust violations when they feature a more prominent size relative to the city of headquarter, which magnifies reputational concerns. Next, using a difference-in-differences setting we show that family firms involved in antitrust violations appoint more family members in executive positions in the aftermath of the indictment. Moreover, these firms invest less and curb equity financing as compared to nonfamily firms. Collectively, our findings suggest that family control wards off reputational damages but at the same time it weakens the ability to expand in order to keep up with fiercer competition following the dismantlement of an anticompetitive practice.

Membership, Governance, and Lobbying in Standard-setting Organizations

Clemens Fiedler (CPB Netherlands Bureau for Economic Policy Analysi)
Maria Larrain (Tilburg University, Tilec, and CentER)
Jens Prüfer (Tilburg University, Tilec, and CentER)

Abstract : Standard-setting organizations (SSOs) are collectively self-governed industry associations, formed by innovators and implementers. They are the main organizational form to agree on and manage technical standards, and form the foundation for many technological and economic sectors. Constructing a model, we study the incentives of heterogeneous innovators and implementers to join an SSO, which is endogenously formed. We also study the effect of SSO governance on membership incentives and on members' lobbying efforts to get their technologies included in the standard. We show that, depending on parameter realizations, one of four equilibrium types arises uniquely. The results can reconcile existing evidence, especially that many SSO member firms are small. We show that raising the influence of implementers within the SSO increases the standard's market coverage and lowers royalty rates but it erodes the innovators' incentives to contribute to the standard. This results shows how the incentives of both type of firms are conflicting within an SSO and need to be carefully weighted for it to be successful.

Who Watches the Watchmen? Local News and Police Behavior in the United States

Nicola Mastrorocco (Trinity College Dublin)
Arianna Ornaghi (University of Warwick)

Abstract : How do the media influence local institutions? We explore the question by looking at how acquisitions of local TV stations by a large broadcast group affect U.S. municipal police departments. To capture variations in local media, we implement a triple differences-in-differences design which exploits the staggered acquisition of local TV stations by the Sinclair Broadcast Group 2010-2017, together with cross-sectional variation in whether municipalities tend to be covered by local news at baseline. First, using a newly collected dataset of transcripts of 300,000 local newscasts, we document that once acquired by Sinclair, local TV stations decrease local crime news coverage. Second, we find that after Sinclair enters a media market, municipalities that were likely to be in the news at baseline experience 8% lower violent crime clearance rates with respect to municipalities that were very rarely in the news. Our preferred interpretation is that the change in content induces police officers to decrease the effort allocated to cleaning violent crimes. We show that this reduction in police effort is not explained by underlying changes in crime rates but, rather, by a decrease in the importance and salience of crime as a topic in the public opinion.

Social Governance

Jeremy McClane (University of Illinois College of Law)
Yaron Nili (University of Wisconsin School of Law)

Abstract : This Article comprehensively examines the importance of director networks to corporate governance. Using qualitative and quantitative data, the Article uncovers the importance of director networks to corporate governance and the implications that network theory poses for the study of corporate law. In doing so, the Article tackles an understudied corner of corporate decision-making at a critical time, when directors have an outsized influence over their companies and in many cases, the United States economy as a whole. This Article builds on a robust literature in corporate governance and decision-making. Much of the existing scholarship has focused on whether directors—especially “busy directors” who serve on multiple boards—are meeting investors’ and regulators’ expectations. However, the literature overlooks an important aspect of busyness, that when directors serve on multiple boards, they also build a social network that extends beyond the companies they serve, spanning several degrees of separation. This Article shows how these broader connections affect corporate governance, making three contributions to the literature. First, it identifies the significance of network theory to contemporary corporate governance discourse and develops a theoretical framework to better account for directors’ service on multiple boards. Second, it empirically examines the direct impact that director networks have on the governance of public firms. It does so through an original data set that reveals some of the positive effects that director networks have on companies’ governance and further demonstrates how network analysis adds important insights to existing empirical studies regarding director service on multiple boards. Finally, the Article suggests that the current discourse by regulators, institutional investors, and academics may underestimate the importance that director networks have for companies. It then suggests several policy reforms to address these findings.